Forex trading entered Nigeria around 2004. It wasn’t initially embraced by Nigerians in those days, mostly because Nigerians prefer doing tangible business as well as the infrastructure (connection to the internet and electricity) was relatively poor.
The emergence of Ponzi schemes by some unregulated financial institutions gave currency trading massive popularity! These financial institutions accepted funds from investors using the commitment of giving a monthly return on the tune of 8.3%. This is huge!!
Most investors diverted their investments from your banks to the telltale Ponzi schemes in 2013 which were making waves in the United States. Nigerians marveled in the returns and discovered upon investigation that people funds experiencing vast amounts of dollars were actively trading the Forex market!! Kabum!
Nigerians (mostly retail traders) decided to take the bull through the horn and launched deep into the unknown and unproven territory. The end result was a massive failure. Discovering this trend, the 1st crowd who got their fingers burnt trading, become trainers as well as brought in an arrival of foreign exchange brokers in Nigeria. For example, Alpari, Liteforex, Instaforex and others
The arrival of foreign brokers also helped in popularizing Forex, simply because they embarked on a national campaign, commencing various cities, educating investors and also onboarding clients in thousands.
Another factor that brought about this wave was that Nigerians would not have to pay huge bank charges in moving their money to offshore brokers as they have several here.
This wave peaked in 2010 and suddenly there was a gentle withdrawal of traders through the business due to the unprecedented loss and confidence in the industry vanished gradually. The crash in the local stock exchange was also a contributing factor as liquidity dried up from the overall economy.
To be candid, the statistics of around 500,000 traders in Nigeria being pelted on the web are not bloated. We likely had more! However, this number has dwindled through the years as a result of monumental loss suffered by traders to the extent that 30% of the figure actively trading cannot be guaranteed.
The Association of Online Forex Trading Agents, a group of the Internet Foreign Currency trading brokers in Nigeria has begun the initiation to regenerate lost confidence by engaging various government agencies to find out of regulating the business enterprise.
Their plea has already obtained the required attention as several of its representatives were invited by a joint group of SEC (Securities and Exchange Commission) and CBN (Central Bank of Nigeria) to get a meeting on how Foreign currency trading may be regulated in Nigeria. We strongly believe the market will take a fresh shape, attracting institutional players once the government regulates the industry – Many Nigerians hope today.